Apple dodged the brunt of COVID supply constraints that hit many Big Tech companies this quarter, mostly because of big wins in the company’s services and subscriptions business and a less-than-expected supply chain hit.
Apple executives touted record iPhone sales for the quarter along with US$83 billion in revenue – up 2 percent year over year despite major COVID lockdown at important suppliers in China. Apple was able to pivot quickly and stay just under its previous warning of a $4 billion- $8 billion revenue hit by shifting to some manufacturers who were less affected by lockdowns.
Another big win, the company said, was in its services and subscriptions business, which rose 19.6 billion for the quarter – up 12 percent year-over-year and staying within analyst expectations. “Overall, we’re very happy with the results,” Cook said during a call with analysts, pointing to the services results, while also admitting that Mac shipments were extremely slowed because of logistics relating to the China COVID lockdowns.
Apple also posted quarterly earnings of $1.20 per diluted share. Apple’s board of directors has declared a cash dividend of 23 cents per share of the company’s common stock.
“This quarter’s record results speak to Apples constant efforts to innovate, to advance new possibilities, and to enrich the lives of our customers,” Cook said in a statement. “As always, we are leading with our values, and expressing them in everything we build, from new features that are designed to protect user privacy and security, to tools that will enhance accessibility… part of our longstanding commitment to create products for everyone.”
Luca Maestri, Apple’s chief financial officer, said, “Our June quarter results continued to demonstrate our ability to manage our business effectively despite the challenging operating environment.” He added that the company generated nearly $23 billion in operating cash flow and returned more than $28 billion to shareholders.
Cook said it was nearly impossible to gage demand for the new M2 line of Macs because of supply issues, but iPhone sales had reached an all-time high to coincide with the ground-breaking smartphone’s 15th anniversary. Cook told investors, “If you look at the June quarter, we do believe we saw macroeconomic headwinds. But when you look at the product categories – on iPhone there were no obvious impacts… We feel very good about the entirety of our business.”
In a statement, Wedbush analyst Daniel Ives called the earnings report Apple’s “Top Gun moment,” saying, “We walk away from the conference call and June results incrementally more positive that Apple can navigate this economic storm with the demand and growth story well intact for iPhones and Services front and centre.” Wedbush said it would maintain its outperform rating on APple’s stock.
Bob O’Donnell, president and chief analyst at TECHnalysis Research, credits Apple’s strong performance to the sway the IT behemoth holds over manufacturers abroad. “Everyone was expecting them to suffer,” he said. “Typically, Apple is the number one customer for most of these suppliers, so they have huge sway when it comes to taking care of them. And that’s very unique to Apple – they can do that in a way maybe no one else can in the industry.”
Apple’s stock was up more than 3 percent to $162.20 in after-hours trading Thursday.